What is the rack rate in hotel terminology?

The rack rate is defined as the published rate that a hotel aims to achieve for a room, representing the standard price before any discounts or promotions are applied. This rate serves as a baseline for the hotel’s pricing strategy and is typically displayed on the hotel's website, brochures, or other marketing materials. It reflects the hotel's desired revenue per room night, as it does not take into account the various discounts or special rates that might be offered to different categories of guests, such as corporate clients, group bookings, or members of loyalty programs.

Understanding this terminology is crucial in the hospitality and tourism industry because the rack rate can influence consumer perceptions of value, attract price-sensitive guests, and guide the hotel's revenue management strategies. The rack rate also allows for adjustments based on demand, occupancy rates, and competitive positioning in the market.